WIPO Members Work To Strengthen Oversight Of UN Agency

World Intellectual Property Organization member governments are hard at work this week trying to improve auditing and oversight of the UN agency, coming after a successful year financially but a year of questions about governance and transparency. Proposed changes include a number of measures on conflicts of interest and investigations even at the highest levels of the organization.

The issue is part of the heavy agenda of the 22^nd session of the WIPO Program and Budget Committee (PBC), which is meeting from 1-5 September. The draft agenda for the week is here [pdf]. The work of the PBC will be sent on to the WIPO General Assembly, taking place from 22-30 September.

Gurry: A Very Positive Biennium

WIPO Director General Francis Gurry, who begins his second term in October, opened the meeting by noting, “These are the first official words to be spoken in this new meeting room, so I think that’s a cause certainly for celebration for us,” referring to WIPO’s grand new conference hall, which is undergoing its final touches.

“It’s a great pleasure for me to welcome you to this new and I think magnificent facility,” he said. “While these are the first words, of course, there will be many, many, many words spoken in this conference room in the coming months and years,” and hopefully they will be “constructive.”

The PBC is the first meeting to be held in the new room, which will be officially inaugurated later. Reporters were not given an opportunity to see the room in person, despite the fact that the room was being broadcast to the world on WIPO’s public webcast.

WIPO’s financial status is strong. Gurry told members that it had been a “very positive biennium,” [corrected] with an overall surplus of some CHF 34.6 million, CHF 680 million received in revenues (5.1 percent above the budgeted figure for the 2012/2013 biennium), and CHF 612 million spent (5.6 percent below what was budgeted). This was achieved in part due to a range of cost-efficiencies, he said, such as the information technology systems, some new management services, and “judicious” use of outsourcing in particular to control staff costs.

Gurry said reserves at the agency had reached some CHF 209 million in net assets, which is above the target level. He said there were important policy questions for the PBC to consider, including the investment policy. The finances and reserves of the organisation are “considerable,” he said, and it is time for WIPO to be “more serious, more rational, more professional, and more responsible” about the level of return on investments, while remaining prudent. If they do act, they take more risk, and if they do nothing, the reserves lose value every year, he said.

The other decision, which Gurry said he hoped will come up next year, is rationalisation of the reserves, closing an old account and suggesting it is time for member states to look again at the target level of reserves, which he said could benefit from being raised. And he highlighted risk management, an initiative launched under the Strategic Realignment Plan he oversaw since taking office in 2008.

The elected chair of the PBC is Colombian Ambassador to the World Trade Organization Gabriel André Duque Mildenberg. The vice-chairs are from Spain and Poland.

Oversight

Member states this week have discussed several reports relating to audit and oversight functions at WIPO, including the Independent Advisory Oversight Committee, External Auditor, director of the Internal Audit and Oversight Division, proposed revisions to the Internal Oversight Charter, and a progress report on implementation of UN Joint Inspection Unit (JIU) recommendations.

At press time, they were continuing informal negotiations on the issue, based on a latest draft reflecting proposed amendments by member states.

The report by the WIPO Independent Advisory Oversight Committee (IAOC) [pdf] (WO/PBC/22/2) was dated 22 August. The IAOC is an external expert advisory body that assists with oversight of WIPO operations. It includes “seven members drawn from WIPO’s geographical groups who serve in their personal capacity and independently of Member States.” Two members were at the PBC to answer questions from member states.

The report highlights some revisions to the WIPO International Oversight Charter, which related to the topics of: internal oversight definitions and standards; mandate; authority and responsibility; conflict of interest; duties and modalities of work; reporting; resources; and the appointment, performance appraisal and dismissal of the director, IOD.

PBC document WO/PBC/22/22 [pdf] shows the Internal Oversight Charter with the proposed changes, including a complete table showing each change with a number of explanations as to why it is proposed.

The subject of current informal discussion is a new draft version [pdf] of the document, dated 2 September. It contains proposed amendments to the revisions put forward by member states, including the United States (the majority of amendments), Mexico, Spain, Group B developed countries (represented by Japan), the African Group represented by Kenya, and the United Kingdom. The document also shows the reaction of the IAOC, which is generally supportive of changes proposed.

Proposed revisions in particular, as stated in the original document from IAOC, are:

Change the name of Internal Audit and Oversight Division (IAOD) to Internal Oversight Division (IOD);

Clarify the mandatory nature of the applicable standards for internal audit, evaluation and investigation;

Strengthen the IAOC’s involvement in the preparation of the IAOD work plan (“review and advice”);

Insert a new section on “Conflict of Interest”, which addresses various situations of potential conflicts of interest, in particular with regard to investigations”;

Extend the possibility for complaints of alleged misconduct to “any other internal or external party”;

Grant public access to IAOD audit and evaluation reports with a provision for exceptionally redacting or withholding reports on specific grounds;

Highlight the need for interaction between the IAOD and other assurance providers as well as the Ethics Office and the Ombudsperson;

Extend, for future incumbents, the non-renewable term of office of the Director, IAOD, to six years (same term limit as for External Auditor (EA)).

A number of members questioned a proposed revision on appointment, performance appraisal and dismissal of the IOD director. The proposal states that the IOD director may be dismissed on specific grounds after consultations with the IAOC and endorsement by the WIPO Coordination Committee (an executive body of member states). The concern was that this might represent a reduction of IAOC’s role from agreeing with the dismissal to only being consulted. It appeared this wording would be changed to retain the stronger involvement of the IAOC, which some see as a trusted independent member state-driven body. The IAOC representative said the committee could accept the change as long as it is understood that the IAOC is not a decision-making body but only an advisory body.

The proposed conflict of interest section clarifies terms for reporting any possible conflicts of interest among the IOD director and oversight staff. Allegations against the IOD director or the WIPO director general would be reported to the General Assembly chair and chairs of the Coordination Committee and IAOC.

The proposed revisions also increase the transparency of internal audit and evaluation reports.

A range of countries asked questions and appeared to support the revisions and amendments to strengthen them further, such as France, Germany, Spain, the United Kingdom, South Korea, Mexico, and Kenya.

US Proposes Stronger Terms for Investigations

The United States this week put forward a document [pdf] offering amendments to the proposed revised Internal Oversight Charter. Discussion of the US proposal yesterday showed general support for the proposed changes, which include several amendments of clauses related to investigations. Clauses lay out enhanced procedures for handling investigations and sharing the reports.

It did not appear to be mentioned in the meeting, but an underlying issue might be the investigation addressed by the IAOC involving accusations about the WIPO director general, who is originally from Australia, made earlier this year by a WIPO deputy director general from the US (IPW, WIPO, 19 May 2014).

Australia pushed back a bit on some of the proposed revisions. For instance, it noted the right of the secretariat to not always implement every recommendation of every legislative body.

Other Oversight Issues

Also on the agenda was the Summary Annual Report by the Director of the Internal Audit and Oversight Division (IAOD) [pdf]. The IOD director, Thierry Rajaobelina, presented the report, emphasising the “total independence” of his office from the WIPO secretariat, while being an employee of the secretariat. The report details the cases that have been brought to the IAOD and their progress on them. The report showed that investigations since 2008 generally have been dealt with in a few months’ time. But it also showed that 141 recommendations by the IAOD are open, including 2 very high-risk and 93 high-risk issues, which several member states commented on. An amendment from Mexico was agreed, demanding the secretariat take action on the recommendations. The WIPO General Assembly was asked to take note.

The PBC is also examining the report of the UN Joint Inspection Unit [pdf] and the WIPO secretariat’s prepared response [JIU] to the report (IPW, WIPO, 28 August 2014). Discussion of the JIU report was begun today, with member states generally welcoming the report and asking for more information on secretariat implementation of specific JIU recommendations.

Also for member states’ review is the Report by the External Auditor [pdf], which contains in particular “the External Auditor’s recommendations arising from the three audits undertaken during the year 2013/2014.” The External Auditor is Shashi Kant Sharma, Comptroller and Auditor General of India. The report found questions regarding WIPO financial reporting, expenditures on development activities, and the construction of the new conference hall.

Accountability, Risk

Approved yesterday was separate proposal on the PBC agenda by the WIPO secretariat on the WIPO Accountability Framework [pdf] that suggests that the PBC recommend the General Assembly’s endorsement of the consolidation of the key accountability components of the organisation, following three pillars: covenant with member states stakeholders and users of WIPO’s services; risk management and internal controls; and complaints and response mechanism.

This comes in response to the JIU report on Accountability Frameworks in the United Nations System, according to the document.

The report asked that “Executive heads of United Nations system organizations that have not yet developed stand-alone accountability frameworks should do so as a matter of priority inspired by the benchmarks contained in this report,” according to the WIPO document.

The IAOD also recommended that the WIPO secretariat engage with the General Assembly to define and get approval for an accountability framework in line with key components as defined and recommended in the report by the JIU, according to the document.

And a Risk Appetite Statement [pdf] was tabled by the WIPO secretariat, following WIPO’s Independent Advisory Oversight Committee (IAOC), and the IAOD request that WIPO establish such a statement. The statement was taken note of by the PBC.

“WIPO’s business model is unique within the United Nations (UN) System, and requires that its risk approach is tailored accordingly,” said the secretariat document, which characterises risk appetite (the amount of risk member states and the secretariat are willing to accept) as referring to: operational risk; financial risks; strategic risks; and additionally reputational impact of these risks. It would essentially set a threshold defining the risk appetite of the organisation, representing the benchmark against which WIPO will actively manage its risks.

The Tone at the Top

At the start of the week, the Development Agenda Group countries requested an agenda item to discussion linking the PBC with the 2007 Development Agenda recommendations, but the WIPO legal counsel was consulted and it was said that agenda items are expected to be submitted one month before the meeting, though he noted that there have been exceptions.

In relation to efforts to improve oversight of the organization, the secretariat has repeatedly welcomed the suggestions and efforts.

The document presenting the Report by the External Auditor also contains WIPO’s Statement of Internal Control, signed by WIPO Director General Francis Gurry. The statement notes that “the system of internal control is designed to reduce and manage rather than eliminate the risk of failure to achieve the organization’s aims and objectives and related policies. Therefore, it can only provide reasonable and not absolute assurance of effectiveness.” The statement notes that “effective internal control, no matter how well designed, has inherent limitations,” so they can “provide only reasonable assurance.”

“As Director General,” it concluded, “I ensure that the ‘tone at the top’ is a clear message that rigorous internal control is critical to the Organization and I am committed to addressing any weaknesses in internal controls noted during the year and to ensure that continuous improvement of the system of internal controls is in place.”